AN increasing trend in recent years has been for businesses to consider entering into franchise agreements with other parties in order to increase their exposure.
AN increasing trend in recent years has been for businesses to consider entering into franchise agreements with other parties in order to increase their exposure.
Unfortunately, in many cases the name under which the franchise is to operate and which will constitute the trade mark of the franchise is not given adequate consideration.
For any franchise agreement to be successful in the marketplace, the trade mark under which the franchise is to operate must be protected.
This is not only for the sake of the owner of the trade mark but also for the security of the franchisee.
There is little merit in granting a franchise to operate a business unless that franchisee can be assured that the trade mark of the franchise cannot be adopted by another party.
Therefore, in considering any franchising arrangement, it is critical to register the trade mark under which the franchise is to operate.
Business name registration and company name registration does not provide any protection.
The only means by which the party can gain protection in a name, comprises registration of the trade mark under the Trade Marks Act.
This Act provides very strong protection throughout Australia. In addition, the Act provides that where the trade mark is used by a franchisee, the usage of the trade mark by the franchisee is use by the owner of the trade mark.
Unfortunately, not all trade marks are capable of being registered. It is a primary characteristic of the Act that for a trade mark to be registrable, it must be “capable of distinguishing goods or services which are provided under that trade mark by the owner of the trade mark”.
Therefore, it is extremely difficult to gain registration of trade marks which are:
• of geographical significance
• common surnames
• descriptive of goods and services
• or complimentary terms.
Generally, no person can claim to themselves the normal use of the English language.
In light of this, it would be extremely difficult to use the following names to gain registration as trade marks:
• Harwood’s Mowing Service for lawn mowing services;
• Half Price Bedding Company for a business relating to the retailing of bedding; or
• Good Value Stores for general retail services
In addition, in choosing a trade mark, it makes no sense to use a trade mark which competitors can use to describe their activities.
Alternatively, if the business chooses a trade mark which is distinctive, this places that business in a very strong marketing position.
Consider some of those franchises which have proven to be extremely successful (eg Snap, Red Rooster, Hungry Jacks and Dome)
To conclude, if you are proposing to franchise your business, you should consider the trade marks which you are going to use at a very early stage in your development and you should seek professional advice regarding the availability and registrability of that trade mark.
• Errol Harwood is partner of Wray & Associates.
Unfortunately, in many cases the name under which the franchise is to operate and which will constitute the trade mark of the franchise is not given adequate consideration.
For any franchise agreement to be successful in the marketplace, the trade mark under which the franchise is to operate must be protected.
This is not only for the sake of the owner of the trade mark but also for the security of the franchisee.
There is little merit in granting a franchise to operate a business unless that franchisee can be assured that the trade mark of the franchise cannot be adopted by another party.
Therefore, in considering any franchising arrangement, it is critical to register the trade mark under which the franchise is to operate.
Business name registration and company name registration does not provide any protection.
The only means by which the party can gain protection in a name, comprises registration of the trade mark under the Trade Marks Act.
This Act provides very strong protection throughout Australia. In addition, the Act provides that where the trade mark is used by a franchisee, the usage of the trade mark by the franchisee is use by the owner of the trade mark.
Unfortunately, not all trade marks are capable of being registered. It is a primary characteristic of the Act that for a trade mark to be registrable, it must be “capable of distinguishing goods or services which are provided under that trade mark by the owner of the trade mark”.
Therefore, it is extremely difficult to gain registration of trade marks which are:
• of geographical significance
• common surnames
• descriptive of goods and services
• or complimentary terms.
Generally, no person can claim to themselves the normal use of the English language.
In light of this, it would be extremely difficult to use the following names to gain registration as trade marks:
• Harwood’s Mowing Service for lawn mowing services;
• Half Price Bedding Company for a business relating to the retailing of bedding; or
• Good Value Stores for general retail services
In addition, in choosing a trade mark, it makes no sense to use a trade mark which competitors can use to describe their activities.
Alternatively, if the business chooses a trade mark which is distinctive, this places that business in a very strong marketing position.
Consider some of those franchises which have proven to be extremely successful (eg Snap, Red Rooster, Hungry Jacks and Dome)
To conclude, if you are proposing to franchise your business, you should consider the trade marks which you are going to use at a very early stage in your development and you should seek professional advice regarding the availability and registrability of that trade mark.
• Errol Harwood is partner of Wray & Associates.
